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INVESTMENTS

 
 

Investment objective

The investment objective for the Aon ERF is to provide a return of at least 0.25% pa (after fees and taxes) above inflation over rolling three-year periods.

The trustee uses the Australian Prudential Regulation Authority's standard risk measure to rate the level of risk of this investment. The standard risk measure is based on industry guidance to allow members to compare investment options that are expected to deliver a similar number of negative annual returns over any 20-year period. The risk rating of the Aon ERF investment is:

  • Risk band: 2
  • Risk label: Low
  • Estimated number of negative annual returns over any 20-year period: 0.5 to less than 1

The standard risk measure does not take into account all forms of investment risk. For example it does not detail what the size of a negative return could be or the likelihood of a positive return being less than you may require to meet your objectives. Nor does it take into account the impact of administration fees and tax on the likelihood of a negative return

Asset allocation

Keeping the investment objective in mind, the following asset allocation is used to invest the Aon ERF assets:


Asset class Allocation
Australian shares 15.0%
International shares 15.0%
Australian fixed interest 36.0%
International fixed interest 24.0%
Cash 10.0%

Investment performance

The Aon ERF was established in December 2003. Net crediting rates for the past five years (after tax, investment and management fees) and the five year compound net crediting rate are given below. The net earning rate may not be the same as the rate credited to members because of the effect of charges by the Fund.

Furthermore benefits are not guaranteed and the value of a member’s investment may rise or fall. Please note that past crediting rates are not an indicator of future net crediting rates.

Year Actual net crediting rate
2016 2.8% pa*
2015 3.6% pa
2014 6.2% pa
2013 5.5% pa
2012 3.0% pa
Compound average net crediting rate for 5 years to 30 June 2016 4.2% pa

 

Labour standards and environmental, social or ethical considerations are not taken into account by the trustee, and are not, to the knowledge of the trustee taken into account by investment managers used.

 

*  Change to actual net crediting rate: This table contains an update to the actual net crediting rate for the year ended 30 June 2016 which was understated and disclosed as 1.8%. The correct crediting rate is 2.8%, which was correctly applied to member’s accounts. There is no financial impact to the members of the Aon Eligible Rollover fund (AERF).